compliance guide - MCX

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Compliance GuideCHAPTER IIIAgreements, Documents, Authorizations, etc.1. Member-Client AgreementThe said requirement of Execution of Member Constituent Agreement is Omitted Vide circularNo. MCX /COMP/469/2011 dated December 22, 2011.2. Common/uniform client registration form/process (w.e.f. April 1, 2012):Requirements regarding Opening of Client AccountsAs per the format prescribed under Circular No. MCX/COMP/469/2011 dated December 22,2011 on common/uniform client registration form/process, the client will be required to fill inonly one set of documents applicable to all commodity Exchanges with effect from April 1, 2012.The member shall make available a folder/booklet containing following documents required forregistration of a client and ensure that a copy of the whole set is provided by them to theclients.a. List of mandatory documents:‣ Know Your Client application form captures the basic information about the constituent.‣ Uniform Risk Disclosure Document detailing risks associated with dealing in thecommodities market.‣ Rights & Obligations of Members, Authorised persons & Clients for trading on Exchanges(including additional rights & obligations in case of internet/Wireless technology basedtrading).‣ Do’s and Don’ts for the Clients.b. Tariff sheet specifying various charges including the rate/amount of brokerage fortrading on the Commodity Exchange(s).c. Contact details of senior officials and Investor Grievance cell.The non-mandatory documents may also be obtained from clients subject to followingconditions:-‣ The clauses should not be in contravention of any clauses in mandatory documents andRules, Business Rules and Bye laws of the Exchange.‣ Any authorization sought has to be a separate document and shall require specific consentof the client.- 20 -
Compliance Guide‣ Authorization sought shall always be subject to following conditions:- The client may revoke the authorization at any time. Authorisation should be in writing and signed by client only. Authorisation should not be obtained for Inter family/group company related accountsadjustment and not for any adjustment of funds among securities exchange andcommodity exchange.3. Know Your Client (KYC) Forms / Client Registration FormsThe Members of the Commodity Exchanges have to complete all the details pertaining to theclients in Know Your Client Forms and obtain all necessary documents in support to informationprovided by the clients as prescribed in Business Rule 27(b), Annexure XII of Business Rules /Circular No. MCX/COMP/469/2011 dated December 22, 2011. Member must ensure that allfields are filled in by the clients in the KYC forms.3.1 Format of KYC FormWhen establishing a relationship with a new Client, Members of the Exchange must takereasonable steps to assess the background, genuineness, beneficial identity, financial soundnessof such person, and his trading objectives by registering the client with them in the formatprescribed as Client Registration Form in terms of Business Rule 27(b), Annexure XII of BusinessRules/ Circular No. MCX/COMP/469/2011 dated December 22, 2011.The KYC form should include all the details as prescribed by the Exchange from time to time.Members are advised to evolve and put in place an appropriate mechanism to assessfinancial strength, performance tracking, trading pattern vis-à-vis their clients’ positionand dealings in respect of all clients.3.2 Documents required from client(s) along with KYC form (Refer Circular No.MCX/COMP/469/2011 dated December 22, 2011MCX/COMP/286/2013 datedAugust 28, 2013 and MCX/COMP/162/2014 dated April 30, 2014)The KYC form shall have all the documents (including copy of PAN card) as prescribed by theExchange / FMC in this regard from time to time. Further, in the cases of Non Resident Indians /foreign nationals / foreign entities / foreign shareholders trading in the commodity derivativesmarket; self-certified copies of statutory approvals in compliance with FEMA guidelines and byregulatory authorities like FIPB, RBI etc. are required to be available with the Member.However, Members may exempt prospective individual clients, residing in the state of Sikkimfrom PAN requirements. But the Members need to ensure that a system of proper verificationexists to verify that such clients are residents of the state of Sikkim.- 21 -
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